07/12/2012 01:55 pm ET | Updated Jul 12, 2012

Illinois Inmates Unemployment Benefits Claimed Despite Likely Ineligibility, Audit Reveals

The Illinois Department of Employment Security has begun comparing the names of unemployment beneficiaries against inmate records from the state's jails and penitentiaries, and the results were jarring.

Preliminary results from a two-week audit suggest that hundreds of ineligible residents may still be receiving checks, costing the program hundreds of thousands of dollars.

The investigation began after State Rep. John Cavaletto raised concerns about potential fraud at the Marion County Jail, NBC Chicago reports.

Cavaletto says constituents reported that inmates were calling the Department of Employment from jail and saying they were unable to find work, according to WGN.

Department spokesman Greg Rivara says that of about 253,000 people currently receiving unemployment benefits statewide, a spot-check found that during a two-week period, 420 people receiving benefits were behind bars at some point, ABC Chicago reports. Depending on the lengths of their sentences, many of those recipients may no longer be eligible for unemployment money, which requires recipients to be available for and actively seeking job opportunities.

People jailed temporarily, particularly on nights and weekends, can still legally receive unemployment benefits, but the agency is concerned that friends or relatives could be collecting checks for people behind bars who shouldn't legally be eligible, Newsmax reports.

Unemployment payments average about $320 per week, according to the Illinois employment department. If all 420 inmates listed as benefit recipients are currently receiving checks, that could cost the state $134,400 in fraudulent payouts in a single week, draining almost $7 million in the course of a year.

Cavaletto told the Chicago Tribune he hopes the fraud investigation will help curb unemployment spending, giving some much-needed relief to struggling Illinois businesses that contribute to the fund.

"These small businesses that have to pay this unemployment insurance, their insurance should be lesser now," Cavaletto said. "Can you imagine how many dollars we've lost through the years? It's in the millions."